Spinning Straw Into Gold

September 02, 2004

It was worthy of cheers in July when the Connecticut Resources Recovery Authority and Attorney General Richard Blumenthal won the return of more than $80 million from Enron in a settlement with the bankrupt Texas energy giant in a federal bankruptcy court.

The $82.7 million settlement represented more than a third of the sum that CRRA lost under previous management because of a boneheaded scheme that CRRA and Enron officials claimed was an energy contract and Mr. Blumenthal said was an illegal loan. When Enron went belly up, CRRA -- or rather, ratepayers in the 70 towns that send their trash to CRRA's Mid-Connecticut incinerator in Hartford -- was on the hook for $220 million.

Even better news came Monday, when officials at the quasi-public CRRA announced that the trash authority had sold the $82.7 million settlement to Deutsche Bank Securities, one of five bidders, for $111.2 million. What had been a 37.4 cents-on-the-dollar return under the bankruptcy settlement jumped to a return of more than 50 cents on the dollar with the sale to Deutsche Bank.

Not bad, considering that in the wake of the Enron bankruptcy, most people in Connecticut -- even those in the know -- felt that CRRA and its customers had been permanently stiffed for the full amount.

Now, after the sale, the agency won't have to hike the tipping fees to towns to outlandish heights to fill the $220 million hole. And, says Tom Kirk, president of CRRA, the agency won't have to borrow much of the more than $100 million that the legislature authorized to bail out the agency.

Mr. Blumenthal says he hopes much of the remaining $100 million lost by CRRA in the Enron deal can be recouped; about 100 other entities and individuals have been sued by the state of Connecticut at his direction.

CRRA customers and state taxpayers should thank Mr. Blumenthal for his aggressive tactics and CRRA's new leaders for their refusal to be satisfied with less. They've turned a huge disaster into much less of one.